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Updated: Aug 7, 2022

In the hyper growth environment of the Transportation & Logistics sector over the past few years, most companies have prospered in top and bottom-line performance... whether leading large or small businesses, astute business leaders have leveraged the high demand for transport and delivery capacity, and significantly increased their top and bottom lines. But with inflation currently at a historic level and likely to get worse, the hyper charged market that produced a glut of shipments, higher rates, and record profits for the industry is undergoing a dramatic change.

Having led several businesses through the major downturns and recessions since the 80's, I've learned a few things that can help you to weather the storm that has already arrived. Over the next several weeks, I'll be posting "Seven Tips for Transportation & Logistics professionals on how to survive and thrive during an economic downturn".

I hope you find a few good ideas to apply in your own business, beginning with...


Retaining your best people

Cutbacks are often a necessary reality during a downturn to ensure the health of the business, but retaining your best customer facing people in sales, customer support, drivers, and other areas of your business that interact daily with your customers, and keep your business afloat and prospering, is key during a downturn. And if you must reduce workforce, it's important to treat those people leaving the company the way you would want to be treated. First, because you should; and second, because everyone will be watching how you treat those leaving. It will send a clear message as to whether you value your most important asset - your people.

And don't underestimate the power that great front-line staff can have in helping you to weather the storm. For example, I used to track the growth of our business in a branch or region by the amount of Sales turnover it had throughout the year. A turnover rate of 10% or less typically correlated with steady & strong growth in sales and customer retention. Except for one of our branches, Los Angeles. It had experienced almost 100% turnover in sales reps one year, which should have spelled disaster, yet their business held up okay. Not great growth, but strong retention of customers. In looking into why, we learned that our "drivers", who interacted daily with hundreds of customers had a very low turnover rate. They were excellent employees, very loyal to the company and their customers, and as a result we had strong retention in the LA market despite nearly 100% sales force churn. The moral of that story is that while Sales is a critical element in securing new customers, retention depends more on front line customer facing roles like drivers, customer service, billing & collections and others that interact hundreds of times per week with your customers. So, while its sometimes difficult to do (i.e., a union represented workforce) make sure you understand the impact of reducing these positions during a downtown and try to retain your best people in these roles.

People vs. Bodies

The best weapon you have to retain your customers as your competitors try to steal them away to make up for their shortfall in volume and revenues in a down economy is your people. And I have always hated the term used by some managers and executives when faced with the prospect of having to reduce hours or staff - i.e., "reducing bodies". It may have something to do with the psychological aversion most (not all) leaders have to laying off good people through no fault of their own during a softening of their business... perhaps to mentally distance themselves from the action... but I hate the term, as its demeaning and says something about whether the company and its executives truly value their people. So, if you must cutback, watch the language and attitude expressed towards your people by management when working through a cutback in staff.

Working from home or office

Like other sectors, since Covid struck working from home has become a reality in the Transportation and Logistics Industry, And, since it's subsided, many have preferred to continue to work from home, at least for part of the week. While it's a viable option for sales, customer support, IT and some admin people, other functions like drivers, warehouse and related management employees have had to continue to work at a company facility. What's happened as a result is the social and community aspect of being part of a team serving its customers has been diminished, and the alignment of teams negatively impacted.

They say we human's function at our best when we're part of a small group of about 30 people... it goes way back to when we lived in small groups foraging and hunting for our food and survival. Working remotely, however, as part of a broad-based national team serving customers from a desk in your basement is quite a different experience.

To address your people’s desire to continue to work from home while building team cohesion, try to create opportunities for “in person” engagement during the downturn. For example, structure your work at home teams to live within the same market, in easy travel distance to a company office or meeting point. This helps to create a small team dynamic, and affiliation with a physical location or a branch and its team. Also, require that people working for the same branch or facility come to the office on a weekly or bi-weekly basis, or perhaps work from the office a few days per week. This will not only improve team dynamics, but also help to boost morale and alignment of the team. Emails and Zoom meetings simply aren't enough to tap into the psychological need we all have to work and communicate with each other in person as part of a small group... being conscious of the importance of this dynamic in a downturn is important and you shouldn't underestimate the negative impact working remotely and alone from home can have on your employees and thereby customer sat and retention.

I hope this is useful... watch for our next Blog Post on Surviving and Thriving the economic downturn - Customer Engagement

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